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TaxRobin
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Experience:  International tax
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During November and December my husband and I sold 2 properties

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During November and December my husband and I sold 2 properties in the uk.
One was our main residence. This was purchased in 2006.
And the second was a buy to let property which was purchased in 2004. To purchase this property we were given a loan by my sister in law for 67k and we purchased the property for 193,000 pounds. It was sold in November for 285,000 pounds.
We want to know our tax obligations on disposal (sale) in respect of both properties.
1. Do we have to file a claim private residence exemption in respect of our main home? Or we don't have to do any filing of any sort.
2. Do we have to pay capital gains tax on the buy -to -let property?
3. How do we calculate capital gains tax?
4 do we have to pay any income tax on any of the properties?
5. We are also spanish residents and I want to know if it is better overall to apply for the exemption as Eu resident to paying capital gains tax. Or will this be more expensive as then we don´t get the private residence exemption?
I await your reply.
Regards
Submitted: 1 year ago.
Category: Tax
Expert:  TaxRobin replied 1 year ago.
Hello1. Do we have to file a claim private residence exemption in respect of our main home? Or we don't have to do any filing of any sort.You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:you have one home and you’ve lived in it as your main home for all the time you’ve owned ityou haven’t let part of it out - this doesn’t include having a single lodgeryou haven’t used part of it for business onlythe grounds, including all buildings, are less than 5,000 square metres (just over an acre) in totalyou didn’t buy it just to make a gainYou don’t need to do anything. You’ll automatically get a tax relief called Private Residence Relief.2. Do we have to pay capital gains tax on the buy -to -let property?You pay Capital Gains Tax on the gain when you sell property that isn’t your main home. You need to pay Capital Gains Tax when you sell an asset if your total taxable gains are above your annual Capital Gains Tax allowance.3. How do we calculate capital gains tax?HM Revenue and Customs (HMRC) calculates the Capital Gains Tax you owe . You’ll either pay 18% or 28% tax on your gains if you’re a basic rate taxpayer. How much you pay depends on the size of your gain and taxable income.4 do we have to pay any income tax on any of the properties?Not the selling of but the let amount is taxable.5. We are also spanish residents and I want to know if it is better overall to apply for the exemption as Eu resident to paying capital gains tax.You have to pay tax on gains you make on residential property in the UK even if you’re non-resident for tax purposes. UK residents have to pay tax on their UK and foreign gains. Non-residents have to pay tax on income, but only pay Capital Gains Tax on UK residential property sold after 5 April 2015.I sincerely ***** ***** above addressed your situation and is helpful. I strongly suggest you work with your personal tax advisor in reporting the sells.
Expert:  TaxRobin replied 1 year ago.
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Customer: replied 1 year ago.
Hello,I don´t have a tax adviser. So
1. How do I go about reporting the salesI am a basic rate tax payer. Therefore we will pay 18%. correct?How do we calculate this figure?
1.We bought the property in 2004 with a 67,000 pounds loan from my sister-inlaw.The rest was by way of mortgage Can we use this to reduce our bill? The purchase price was 193,000 pounds
2. We sold the property in November 2015 for 285,000 pounds. To calculate capital gains tax payable is it : 285,000 less 193000= 92,000x 18/100=16560. Will our estimate bill be 16560.
3. Can we deduct the costs of the mortgage, solicitors fees and the estate agency fees?
4. Are there any other deductions we can make?
5. Can we pay the capital gains tax payable by installments as we are both unemployed at the moment?.
Regards
Expert:  TaxRobin replied 1 year ago.
HelloIf you are basic rate then that is correct you will pay 18%.You only have to pay Capital Gains Tax on your overall gains and you still receive your free allowance (£11,000).Report any gains you need to pay in a Self Assessment tax return.If you don’t usually send a tax return, register for Self Assessment .Your gain is usually the difference between what you paid for your property and the amount you got when you sold. You can deduct costs of buying, selling or improving your property from your gain. These include:estate agents’ and solicitors’ feescosts of improvement works, eg for an extension (normal maintenance costs don’t count, eg for decorating)After you have subtracted your costs then you see if the gain is above your allowance ((£11,000) that woudll be the part you pay tax on.You may be able to either:get more time to paypay your bill in instalments by direct debitHMRC will charge interest if you pay by installments. But before you worry about make sure you do have a gain.
Customer: replied 1 year ago.
Thanks so much for your guidance. It is become somewhat clearer.1. I am assuming that I am entitled to 11,000 personal allowance and my husband is entitled to his 11,000 personal allowance.2. Why can´t I deduct the loan I received from my sister-in-law?3. Is this how I have to do the calculations?:1. Sale proceeds 285,000
2. Purchase price 193,000
3. Diff 92,000
Less
4. Solcitors fees (1068)
5. Estate Agents (4979.29)
6. Total 85952.71
7. Less Person allowance 11,000
8. Less Personal allowance 11,000
9. Total 63952.71
10. So we have to pay 63952.71 x 18/100
11. Capital gains tax payable =11511.48784. When am I to report this sale to HMRC? When am I to do the self assessment? Where do I find this form? What is it called?Regards
Expert:  TaxRobin replied 1 year ago.
You do not deduct the loan because you borrowed the money but the house became yours by doing so. You need to register for Self Assessment. Fill in form SA1 to tell HMRC that you need to send a tax return.You’ll get a Unique Taxpayer Reference (UTR) in the post within 10 working days (21 if you’re abroad) - you’ll need it to send a paper tax return or to enroll to send it online.https://online.hmrc.gov.uk/shortforms/form/SA1The above is a link to use.Please do not forget to click on a rating.
Expert:  TaxRobin replied 1 year ago.
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Category: Tax
Satisfied Customers: 14431
Experience: International tax
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Customer: replied 1 year ago.
Thank you.
The property was sold on the 5th of November 2015. Are there deadlines for reporting this sale? If so what are they? I think I read that I had until October of NEXT YEAR 2016 to make payment? Is this correct?Also for the last 2 years my husband has been living the this buy.to.let property as we have separated. We have not divorced nor separated legally. But because we will be doing so we decided to sell both houses and split the proceeds for us to go our separate ways.Is he allowed to claim a private residence relief for this property?
And I am able to claim private resident relief for the other that I have been living with the children?Regards,
Expert:  TaxRobin replied 1 year ago.
Yes, you should register by 5 October.He may be allowed the private residence relief as a portion based on his time in the property.You can claim private residence relief on your home.
Customer: replied 1 year ago.
Are we to fill out the form SA1 together or separately? So I need to register by 5th October 2016? Year 2016????
Expert:  TaxRobin replied 1 year ago.
Your SA is for each individual. If a property was jointly owned each owner must tell HMRC about their own gain or loss.The tax year started on 6 April 2015 and ends on 5 April 2016. So you will be filing in Oct 2016.
Customer: replied 1 year ago.
I would like to know if
1. we left the uk 6 years ago
2. during that time on of us lived there for for 6 months in 2012
3. and for the last 3 month of 2015 we lived in one of the property for 3 months (Aug -Nov date of sale)
4. Are we still entitled to private residence relief?
5. Or do we have to pay capital gains tax on both properties?
6 If we have to pay capital gains tax on both properties is there personal allowance relief of 11,100 each? Or no relief available as non-residence?
Expert:  TaxRobin replied 1 year ago.
You get your personal allowance on sells.The Private Residence Relief is when you sell your main home. You must have lived in your home as your only or main residence at some point while you owned it.You may get less if you live away from your home. However, you always get relief for certain periods.No matter how many homes you own or where you lived at the time, you always get relief for the last 18 months before you sold your home.

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